Vietnam contributed significantly to a 5.6% year-on-year fall in Heineken's global sales in the first half of the year, says the leading beer maker.
In its H1 report, Heineken says the economic slowdown in Vietnam, especially in major cities, continued into the second quarter and disproportionally impacted the premium beer segment.
In particular, Heineken’s net revenue in Vietnam declined by over 20% as the result of a 25% fall in sales volume. The brewer estimates that the total market was down by high single-digits in the second quarter, according to CEO Dolf van den Brink.
Over half of the drop in sales volume was driven by the destocking of Tet (Lunar New Year) overhang, and the distributors’ stock levels getting “normalized” in the second quarter, the CEO added.
Besides, the market’s downtrading, exacerbated by Heineken products’ pricing ahead of the market, particularly Tiger beer, contributed to the brand’s underperformance in the period.
Heineken was addressing the issue to restore consumers’ affordability, he said
Some of Heineken products performed well in the period, like the premium brands of Heineken Silver and Tiger Crystal and mainstream ones of Bia Viet and Bivina, supported by brewer’s expansion to regions beyond its core strengths.
The brewer’s net global revenue increased 12% year-on-year to EUR14.51 billion ($15.94 billion) in H1/2023, as the growth in the underlying price-mix component outweighed the fall in the volume sales.
A 2.8 percentage point decrease within the fall of 5.4% in H1/2023 volume sales “can be attributed to the underperformance in Vietnam and socioeconomic volatility in Nigeria,” said CFO Harold van den Broek.
For H2/2023, Heineken expects significantly improved growth in operating profit, partly thanks to improved outlook in Vietnam and Nigeria.
It said in a recent review that retail beer sales in Vietnam reached EUR11 billion ($12.07 billion) last year, adding that was the market leader in the country. It also said that Vietnam’s beer market volume hit 46 million hectoliters in 2022, up 3.6% over 2021.
Heineken Vietnam said in the report that it supported 246,000 jobs across the value chain, equivalent to 0.49% of Vietnam’s labor force.
Heineken Vietnam’s value chain contributed VND72.7 trillion ($3.07 billion) to the economy, representing 1.04% of the country’s GDP, higher than the 0.94% posted in 2019 in the pre-pandemic era, the report said.